The macro-economic effect of codetermination on income equality
Many studies on the effect of codetermination at company-level reveal its significant influence on wage levels within companies. However, does this effect at the micro-level result in higher income equality at the macro-level as well?
A cross-sectional regression analysis of data on EU and OECD countries will be used to test for the codetermination’s effect on income distribution. Assessing the impact of codetermination, a new index on codetermination strength will be introduced, combining the scope of codetermination rights with the threshold of codetermination laws. The results suggest a significant negative impact on the Gini index which indicates that codetermination rights lead to higher income equality.